OMB circular A-133-Program Income

Income generated from a federal program must be recorded correctly and used as a deduction from outlays, as an addition to the project budget, or to meet matching requirements.

Program income is gross income received that is directly generated by the federally-funded project during the grant period. If authorized by federal regulations or the grant agreement, costs incident to the generation of program income may be deducted from gross income to determine program income.

Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired with grant funds, the sale of commodities or items fabricated under a grant agreement, and payments of principal and interest on loans made with grant funds.

Except as otherwise provided in the federal-awarding agency regulations or terms and conditions of the award, program income does not include interest on grant funds (covered under “Cash Management”), rebates, credits, discounts, refunds, etc. (covered under “Allowable Costs/Cost Principles”), or interest earned on any of them (covered under “Cash Management”). Program income does not include the proceeds from the sale of equipment or real property (covered under “Equipment and Real Property Management”). These items are handled in the manner described in the appropriate section.

Program income may be used in one of three methods: deducted from outlays, added to the project budget, or used to meet matching requirements. Unless specified in the federal-awarding agency regulations or the terms and conditions of the award, program income shall be deducted from program outlays. However, for research and development activities by institutions of higher education, hospitals, and other nonprofit organizations, the default method is to add program income to the project budget. Unless federal-awarding agency regulations or the terms and conditions of the award specify otherwise, non-federal entities have no obligation to the federal government regarding program income earned after the end of the grant period.